Peter Lynch
Peter Lynch is perhaps the highest profile fund manager of all time. Between 1977 and 1990 he ran Fidelity’s flagship Magellan Fund in the United States, outperforming the market index by an average of 13% a year (his total return averaged 29% a year).
His eminently readable book One Up on Wall Street coined several new investment terms. His favourite companies were ‘tenbaggers’—those whose share price increased by 10 times or more.
Lynch was renowned for investing in anything and everything, and diversified his portfolio to the point where his fund contained 1,400 companies. He would invest in all types of companies, from slow growers to stalwarts, cyclicals to turnarounds and asset plays. But his favourite stocks were the fast growers—young, easy to understand, successful companies with a winning business formula.
Lynch also believes small investors have an advantage over large fund managers, who are often blinkered to new ideas. Many of his best ideas came from personal experience—wandering shopping malls seeking new stores, or observing products his wife was buying.
Finally, Lynch also suggested investors ignore market fluctuations and the economy and invest for the long term (his best returns typically came after three years of ownership). His strategy is probably best summarised as trying to identify fast growing companies when they were still at reasonable prices.
Further Reading
- An interview with Peter Lynch, a revealing insight into his methods, his personality and his history.
- His two major publications, both of which are easily digested, even for novice investors, are One up on Wall Street and Beating the Street.
